1

G.R. No. 146807      May 9, 2002 relief prayed for. It claimed that the provisions of the Association’s By-laws and the Deed of Transfer did
not contemplate automatic membership. Rather, the owner or long-term lessee becomes a member of
the Association only after applying with and being accepted by its Board of Directors. Assuming further
PADCOM CONDOMINIUM CORPORATION, petitioner,
that PADCOM was a member of the Association, the latter failed to show that the collection of monthly
vs.
dues was a valid corporate act duly authorized by a proper resolution of the Association’s Board of
ORTIGAS CENTER ASSOCIATION, INC., respondent.
Directors.8

DAVIDE, JR., C.J.:
After due consideration of the issues raised in the motion to dismiss, the trial court rendered a decision
dismissing the complaint.9
1
Challenged in this case is the 30 June 2000 decision  of the Court of Appeals in CA-G.R. CV No. 60099,
reversing and setting aside the 1 September 1997 decision 2 of the Regional Trial Court of Pasig City,
The Association appealed the case to the Court of Appeals, which docketed the appeal as CA-G.R. CV No.
Branch 264, in Civil Case No. 63801.3
60099. In its decision10 of 30 June 2000, the Court of Appeals reversed and set aside the trial court’s
dismissal of Civil Case No. 63801, and decreed as follows:
Petitioner Padcom Condominium Corporation (hereafter PADCOM) owns and manages the Padilla Office
Condominium Building (PADCOM Building) located at Emerald Avenue, Ortigas Center, Pasig City. The
WHEREFORE, the appealed decision dated September 1, 1997
land on which the building stands was originally acquired from the Ortigas & Company, Limited
is REVERSED and SET ASIDE and, in lieu thereof, a new one is entered ordering the appellee
Partnership (OCLP), by Tierra Development Corporation (TDC) under a Deed of Sale dated 4 September
(PADCOM) to pay the appellant (the Association) the following:
1974. Among the terms and conditions in the deed of sale was the requirement that the transferee and
its successor-in-interest must become members of an association for realty owners and long-term
lessees in the area later known as the Ortigas Center. Subsequently, the said lot, together with 1) P639,961.47 as and for membership dues in arrears inclusive of earned interests and
improvements thereon, was conveyed by TDC in favor of PADCOM in a Deed of Transfer dated 25 penalties; and
February 1975.4
2) P25,000.00 as and for attorney’s fees.
In 1982, respondent Ortigas Center Association, Inc. (hereafter the Association) was organized to
advance the interests and promote the general welfare of the real estate owners and long-term lessees
Costs against the appellees.
of lots in the Ortigas Center. It sought the collection of membership dues in the amount of two thousand
seven hundred twenty-four pesos and forty centavos (P2,724.40) per month from PADCOM. The
corporate books showed that PADCOM owed the Association P639,961.47, representing membership SO ORDERED.
dues, interests and penalty charges from April 1983 to June 1993.5 The letters exchanged between the
parties through the years showed repeated demands for payment, requests for extensions of payment, The Court of Appeals justified its ruling by declaring that PADCOM automatically became a member of
and even a settlement scheme proposed by PADCOM in September 1990. the Association when the land was sold to TDC. The intent to pass the obligation to prospective
transferees was evident from the annotation of the same clause at the back of the Transfer Certificate of
In view of PADCOM’s failure and refusal to pay its arrears in monthly dues, including interests and Title covering the lot. Despite disavowal of membership, PADCOM’s membership in the Association was
penalties thereon, the Association filed a complaint for collection of sum of money before the trial court evident from these facts: (1) PADCOM was included in the Association’s list of bona fide members as of
below, which was docketed as Civil Case No. 63801. The Association averred that purchasers of lands 30 March 1995; (2) Narciso Padilla, PADCOM’s President, was one of the Association’s incorporators; and
within the Ortigas Center complex from OCLP are obligated under their contracts of sale to become (3) having received the demands for payment, PADCOM not only acknowledged them, but asked for and
members of the Association. This obligation was allegedly passed on to PADCOM when it bought the lot was granted repeated extensions, and even proposed a scheme for the settlement of its obligation. The
from TDC, its predecessor-in-interest.6 Court of Appeals also ruled that PADCOM cannot evade payment of its obligation to the Association
without violating equitable principles underlying quasi-contracts. Being covered by the Association’s
avowed purpose to promote the interests and welfare of its members, PADCOM cannot be allowed to
In its answer, PADCOM contended that it is a non-stock, non-profit association, and for it to become a
expediently deny and avoid the obligation arising from such membership.
special member of the Association, it should first apply for and be accepted for membership by the
latter’s Board of Directors. No automatic membership was apparently contemplated in the Association’s
By-laws. PADCOM added that it could not be compelled to become a member without violating its right Dissatisfied with the adverse judgment of the Court of Appeals, PADCOM filed the petition for review in
to freedom of association. And since it was not a member of the Association, it was not liable for this case. It raises the sole issue of whether it can be compelled to join the association pursuant to the
membership dues, interests and penalties.7 provision on automatic membership appearing as a condition in the Deed of Sale of 04 September 1974
and the annotation thereof on Transfer Certificate of Title No. 457308.
During the trial, the Association presented its accountant as lone witness to prove that PADCOM was,
indeed, one of its members and, as such, did not pay its membership dues.1âwphi1.nêt PADCOM contends that it cannot be compelled to be a member of the Association solely by virtue of the
"automatic membership" clause that appears on the title of the property and the Deed of Transfer. In
1975, when it bought the land, the Association was still inexistent. Therefore, the provision on automatic
PADCOM, on the other hand, did not present its evidence; instead it filed a motion to dismiss by way of
membership was anticipatory in nature, subject to the actual formation of the Association and the
demurrer to evidence. It alleged that the facts established by the Association showed no right to the
subsequent formulation of its implementing rules.
2
PADCOM likewise maintains that the Association’s By-laws requires an application for membership. Since
it never sought membership, the Court of Appeals erred in concluding that it was a member of the
Association by implication. Aside from the lack of evidence proving such membership, the Association
has no basis to collect monthly dues since there is no board resolution defining and prescribing how
much should be paid.
For its part, the Association claims that the Deed of Sale between OCLP and TDC clearly stipulates
automatic membership for the owners of lots in the Ortigas Center, including their successors-in-
interest. The filing of applications and acceptance thereof by the Board of Directors of the Association
are, therefore, mere formalities that can be dispensed with or waived. The provisions of the
Association’s By-laws cannot in any manner alter or modify the automatic membership clause imposed
on a property owner by virtue of an annotation of encumbrance on his title.
The Association likewise asserts that membership therein requires the payment of certain amounts for
its operations and activities, as may be authorized by its Board of Directors. The membership dues are
for the common expenses of the homeowners for necessary services.
After a careful examination of the records of this case, the Court sees no reason to disturb the assailed
decision. The petition should be denied.
Section 44 of Presidential Decree No. 152911 mandates that:
SEC. 44. Statutory liens affecting title. – Every registered owner receiving a certificate of title
in pursuance of a decree of registration, and every subsequent purchaser of registered land
taking a certificate of title for value and in good faith, shall hold the same free from all
encumbrances except those noted on said certificate and any of the following encumbrances
which may be subsisting, namely: xxx
Under the Torrens system of registration, claims and liens of whatever character, except those
mentioned by law, existing against the land binds the holder of the title and the whole world. 12
It is undisputed that when the land in question was bought by PADCOM’s predecessor-in-interest, TDC,
from OCLP, the sale bound TDC to comply with paragraph (G) of the covenants, conditions and
restrictions of the Deed of Sale, which reads as follows:13
G. AUTOMATIC MEMBERSHIP WITH THE ASSOCIATION:
The owner of this lot, its successor-in-interest hereby binds himself to become a member of
the ASSOCIATION which will be formed by and among purchasers, fully paid up Lot BUYERS,
Building Owners and the COMPANY in respect to COMPANY OWNED LOTS.
The OWNER of this lot shall abide by such rules and regulations that shall be laid down by the
ASSOCIATION in the interest of security, maintenance, beautification and general welfare of
the OFFICE BUILDING zone. The ASSOCIATION when organized shall also, among others,
provide for and collect assessments which shall constitute a lien on the property, junior only
to liens of the Government for taxes.
Evidently, it was agreed by the parties that dues shall be collected from an automatic member and such
fees or assessments shall be a lien on the property.
This stipulation was likewise annotated at the back of Transfer Certificate of Title No. 457308 issued to
TDC.14 And when the latter sold the lot to PADCOM on 25 February 1975, the Deed of Transfer expressly
stated:15
NOW, THEREFORE, for and in consideration of the foregoing premises, the DEVELOPER, by
these presents, cedes, transfers and conveys unto the CORPORATION the above-described
parcel of land evidenced by Transfer Certificate of Title No. 457308, as well as the Common
and Limited Common Areas of the Condominium project mentioned and described in the
Master Deed with Declaration of Restrictions (Annex "A" hereof), free from all liens and
encumbrances, except those already annotated at the back of said Transfer Certificate of Title
No. 457308, xxx
This is so because any lien annotated on previous certificates of title should be incorporated in or carried
over to the new transfer certificates of title. Such lien is inseparable from the property as it is a right in
rem, a burden on the property whoever its owner may be. It subsists notwithstanding a change in
ownership; in short, the personality of the owner is disregarded. 16 As emphasized earlier, the provision
on automatic membership was annotated in the Certificate of Title and made a condition in the Deed of
Transfer in favor of PADCOM. Consequently, it is bound by and must comply with the
covenant.1âwphi1.nêt
Moreover, Article 1311 of the Civil Code provides that contracts take effect between the parties, their
assigns and heirs. Since PADCOM is the successor-in-interest of TDC, it follows that the stipulation on
automatic membership with the Association is also binding on the former.
We are not persuaded by PADCOM’s contention that the By-laws of the Association requires application
for membership and acceptance thereof by the Board of Directors. Section 2 of the By-laws 17 reads:
Section 2. Regular Members. – Upon acceptance by the Board of Directors of Ortigas Center
Association, Inc., all real estate owners, or long-term lessees of lots within the boundaries of
the Association as defined in the Articles of Incorporation become regular members,
provided, however that the long-term lessees of a lot or lots in said area shall be considered
as the regular members in lieu of the owners of the same. Likewise, regular membership in
the Association automatically ceases upon the cessation of a member to be an owner or long-
term lessee of real estate in the area.
A lessee shall be considered a long-term lessee if his lease is in writing and for a period of two
(2) years or more. Membership of a long-term lessee in the Association shall be co-terminus
with his legal possession (or his lease) of the lot/s in the area. Upon the lessee’s cessation of
membership in the Association, the owner shall automatically succeed the lessee as member
thereat.
As lot owner, PADCOM is a regular member of the Association. No application for membership is
necessary. If at all, acceptance by the Board of Directors is a ministerial function considering that
PADCOM is deemed to be a regular member upon the acquisition of the lot pursuant to the automatic
membership clause annotated in the Certificate of Title of the property and the Deed of Transfer.
Neither are we convinced by PADCOM’s contention that the automatic membership clause is a violation
of its freedom of association. PADCOM was never forced to join the association. It could have avoided
such membership by not buying the land from TDC. Nobody forced it to buy the land when it bought the
building with the annotation of the condition or lien on the Certificate of Title thereof and accepted the
3
Deed. PADCOM voluntarily agreed to be bound by and respect the condition, and thus to join the
Association.
In addition, under the principle of estoppel, PADCOM is barred from disclaiming membership in the
Association. In estoppel, a person, who by his act or conduct has induced another to act in a particular
manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby
causes loss or injury to another.18
We agree with the Court of Appeals’ conclusion from the facts or circumstances it enumerated in its
decision and enumerated above that PADCOM is, indeed, a regular member of the Association. These
facts and circumstances are sufficient grounds to apply the doctrine of estoppel against PADCOM.
Having ruled that PADCOM is a member of the Association, it is obligated to pay its dues incidental
thereto. Article 1159 of the Civil Code mandates:
STA. CLARA HOMEOWNERS’ ASSOCIATION thru its Board of Directors composed of ARNEIL CHUA, LUIS
SARROSA, JOCELYN GARCIA, MA. MILAGROS VARGAS, LORENZO LACSON, ERNESTO PICCIO, DINDO
ILAGAN, DANILO GAMBOA JR. and RIZZA DE LA RAMA; SECURITY GUARD CAPILLO; "JOHN DOE"; and
SANTA CLARA ESTATE, INC., petitioners,
vs.
Spouses VICTOR MA. GASTON and LYDIA GASTON, respondents.
PANGANIBAN, J.:
A motion to dismiss based on lack of jurisdiction and lack of cause of action hypothetically admits the
truth of the allegations in the complaint. It is not dependent on the pleas or the theories set forth in the
answer or the motion to dismiss. Membership in a homeowners’ association is voluntary and cannot be
unilaterally forced by a provision in the association’s articles of incorporation or by-laws, which the
alleged member did not agree to be bound to.

Statement of the Case

Art. 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
The Petition for Review before us assails the August 31, 1999 Decision 1 and the February 11, 2000
Resolution2 of the Court of Appeals (CA) in CA-GR SP No. 49130. The decretal portion of the challenged
Assuming in gratis argumenti that PADCOM is not a member of the Association, it cannot evade payment
Decision reads as follows:
without violating the equitable principles underlying quasi-contracts. Article 2142 of the Civil Code
provides:
"WHEREFORE, the petition is DISMISSED for lack of merit. The assailed Orders of the trial
court are AFFIRMED. No costs."3
Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of
quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense
of another. The assailed Resolution denied petitioner’s Motion for Reconsideration.

Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor
dictated by equity and by the principles of absolute justice. Examples of these principles are: (1) it is
presumed that a person agrees to that which will benefit him; (2) nobody wants to enrich himself
unjustly at the expense of another; or (3) one must do unto others what he would want others to do
unto him under the same circumstances.19
The CA4 affirmed the Orders5 of the Regional Trial Court (RTC) of Bacolod City (Branch 49) in Civil Case No.
98-10217, which had refused to dismiss herein respondents’ Complaint for alleged lack of jurisdiction
and lack of cause of action.
The Facts

As resident and lot owner in the Ortigas area, PADCOM was definitely benefited by the Association’s acts
The factual antecedents of the case are summarized by the Court of Appeals in this wise:
and activities to promote the interests and welfare of those who acquire property therein or benefit
from the acts or activities of the Association.1âwphi1.nêt
"On 1 April 1998, Spouses Victor Ma. Gaston and Lydia M. Gaston, private respondents
herein, filed a complaint for damages with preliminary injunction/preliminary mandatory
Finally, PADCOM’s argument that the collection of monthly dues has no basis since there was no board
injunction and temporary restraining order before the Regional Trial Court in Negros
resolution defining how much fees are to be imposed deserves scant consideration. Suffice it is to say
Occidental at Bacolod City against petitioners Santa Clara Homeowners Association (SCHA for
that PADCOM never protested upon receipt of the earlier demands for payment of membership dues. In
brevity) thru its Board of Directors, namely: Arneil Chua, Luis Sarrosa, Jocelyn Garcia, Ma.
fact, by proposing a scheme to pay its obligation, PADCOM cannot belatedly question the Association’s
Milagros Vargas, Lorenzo Lacson, Ernesto Piccio, Dindo Ilagan, Danilo Gamboa, Jr., Rizza de la
authority to assess and collect the fees in accordance with the total land area owned or occupied by the
Rama and Security Guard Capillo and ‘John Doe’, and Santa Clara Estate, Incorporated. The
members, which finds support in a resolution dated 6 November 1982 of the Association’s incorporating
case was docketed as Civil Case No 98-10217 and raffled to RTC-Branch 49, Bacolod City.
directors20 and Section 2 of its By-laws.21

"The complaint alleged that private respondents herein [were] residents of San Jose Avenue,
WHEREFORE, the petition is hereby DENIED for lack of merit.
Sta. Clara Subdivision, Mandalagan, Bacolod City. They purchased their lots in the said
subdivision sometime in 1974, and at the time of purchase, there was no mention or
G.R. No. 141961            January 23, 2002 requirement of membership in any homeowners’ association. From that time on, they have
remained non-members of SCHA. They also stated that an arrangement was made wherein
homeowners who [were] non-members of the association were issued ‘non-member’
4
gatepass stickers for their vehicles for identification by the security guards manning the thereafter submitted by the parties, denied the said motion without however ruling on the
subdivision’s entrances and exits. This arrangement remained undisturbed until sometime in additional ground of lack of cause of action x x x.
the middle of March, 1998, when SCHA disseminated a board resolution which decreed that
only its members in good standing were to be issued stickers for use in their vehicles.
x x x           x x x           x x x
Thereafter, on three separate incidents, Victor M. Gaston, the son of the private respondents
herein who lives with them, was required by the guards on duty employed by SCHA to show
his driver’s license as a prerequisite to his entrance to the subdivision and to his residence "On 18 August 1998, petitioners filed a motion to resolve defendants’ motion to dismiss on
therein despite their knowing him personally and the exact location of his residence. On 29 ground of lack of cause of action. On 8 September 1998, after the petitioners and the private
March 1998, private respondent herein Victor Ma. Gaston was himself prevented from respondents submitted their pleadings in support of or in opposition thereto, as the case may
entering the subdivision and proceeding to his residential abode when petitioner herein be, the trial court issued an order denying the motion, x x x."6
security guards Roger Capillo and a ‘John Doe’ lowered the steel bar of the KAMETAL gate of
the subdivision and demanded from him his driver’s license for identification. The complaint On September 24, 1998, petitioners elevated the matter to the Court of Appeals via a Petition for
further alleged that these acts of the petitioners herein done in the presence of other Certiorari.7
subdivision owners had caused private respondents to suffer moral damage.

Ruling of the Court of Appeals

"On 3 April 1998, during the hearing of the private respondents’ application for the issuance
of a temporary restraining order before the lower court, counsel for the petitioners informed
the court that he would be filing a motion to dismiss the case and made assurance that The Court of Appeals dismissed the Petition and ruled that the RTC had jurisdiction over the dispute. It
pending the issuance of a temporary restraining order, the private respondents would be debunked petitioners’ contention that an intra-corporate controversy existed between the SCHA and
granted unrestricted access to and from their place of residence. respondents. The CA held that the Complaint had stated a cause of action. It likewise opined that
jurisdiction and cause of action were determined by the allegations in the complaint and not by the
defenses and theories set up in the answer or the motion to dismiss.
"On 8 April 1998, petitioners herein filed a motion to dismiss arguing that the trial court ha[d]
no jurisdiction over the case as it involve[d] an intra-corporate dispute between SCHA and its
members pursuant to Republic Act No. 580, as amended by Executive Order Nos. 535 and 90, Hence, this Petition.8
much [less], to declare as null and void the subject resolution of the board of directors of
SCHA, the proper forum being the Home Insurance (and Guaranty) Corporation (HIGC). To Issues
support their claim of intra-corporate controversy, petitioners stated that the Articles of
Incorporation of SCHA, which was duly approved by the Securities and Exchange Commission
(SEC) on 4 October 1973, provides ‘that the association shall be a non-stock corporation with In their Memorandum, petitioners raise the following issues for the Court’s consideration:
all homeowners of Sta. Clara constituting its membership’. Also, its by-laws contains a
provision that ‘all real estate owners in Sta. Clara Subdivision automatically become members I
of the association’. The private respondents, having become lot owners of Sta. Clara
Subdivision in 1974 after the approval by the SEC of SCHA’s articles of incorporation and by-
"Whether or not Respondent Court of Appeals erred in upholding the jurisdiction of the court
laws, became members automatically in 1974 of SCHA argued the petitioners. Moreover, the
a quo, ‘to declare as null and void the resolution of the Board of SCHA, decreeing that only
private respondents allegedly enjoyed the privileges and benefits of membership in and
members [in] good standing of the said association, were to be issued stickers for use in their
abided by the rules of the association, and even attended the general special meeting of the
vehicles.
association members on 24 March 1998. Their non-payment of the association yearly dues
[did] not make them non-members of SCHA continued the petitioners. And even granting that
the private respondents [were] not members of the association, the petitioners opined that II
the HIGC still ha[d] jurisdiction over the case pursuant to Section 1 (a), Rule II of the Rules of
Procedure of the HIGC. "Whether or not private respondents are members of SCHA.

"On 6 July 1998, the lower court, after having received private respondents opposition to III
petitioners’ motion to dismiss and other subsequent pleadings filed by the parties, resolved to
deny petitioners’ motion to dismiss, finding that there existed no intra-corporate controversy
since the private respondents alleged that they ha[d] never joined the association; and, thus, "Whether or not Respondent Court of Appeals erred in not ordering the dismissal of the
the HIGC had no jurisdiction to hear the case. On 18 July 1998, petitioners submitted a Complaint in Civil Case No. 98-10217 for lack of cause of action."9
Motion for Reconsideration, adding lack of cause of action as ground for the dismissal of the
case. This additional ground was anchored on the principle of damnum absque injuria as In sum, the issues boil down to two: (1) Did the RTC have jurisdiction over the Complaint? and (2) Did the
allegedly there [was] no allegation in the complaint that the private respondents were Complaint state a cause of action?
actually prevented from entering the subdivision and from having access to their residential
abode. On 17 August 1998, the court a quo, taking into consideration the comment filed by
the private respondents[,] on petitioners’ motion for reconsideration and the pleadings This Court’s Rulings
5
The Petition has no merit.
First Issue:
Jurisdiction
Petitioners contend that the CA erred in upholding the trial court’s jurisdiction to declare as null and void
the SCHA Resolution decreeing that only members in good standing would be issued vehicle stickers.
The RTC did not void the SCHA Resolution; it merely resolved the Motion to Dismiss filed by petitioners
by holding that it was the RTC, not the Home Insurance and Guaranty Corporation (HIGC), that had
jurisdiction over the dispute.
HIGC’s Jurisdiction
HIGC10 was created pursuant to Republic Act 580.11 Originally, administrative supervision over
homeowners’ associations was vested by law in the Securities and Exchange Commission (SEC). 12
Pursuant to Executive Order (EO) No. 535, however,13 the HIGC assumed the regulatory and adjudicative
functions of the SEC over homeowners’ associations. Explicitly vesting such powers in the HIGC is
paragraph 2 of EO 535, which we quote hereunder:
"2. In addition to the powers and functions vested under the Home Financing Act, the
Corporation, shall have among others, the following additional powers:
(a) x x x; and exercise all the powers, authorities and responsibilities that are
vested in the Securities and Exchange Commission with respect to home owners
associations, the provision of Act 1459, as amended by P.D. 902-A, to the contrary
nothwithstanding;
(b) To regulate and supervise the activities and operations of all houseowners
associations registered in accordance therewith."
Moreover, by virtue of the aforequoted provision, the HIGC also assumed the SEC’s original and exclusive
jurisdiction to hear and decide cases involving controversies arising from intra-corporate or partnership
relations.14
In December 1994, the HIGC adopted the Revised Rules of Procedure in the Hearing of Homeowners’
Disputes, pertinent portions of which are reproduced below:
"RULE II
Disputes Triable by HIGC/Nature of Proceedings
Section 1. Types of Disputes. - The HIGC or any person, officer, body, board or committee duly
designated or created by it shall have jurisdiction to hear and decide cases involving the
following:
a) Devices or schemes employed by or any acts of the Board of Directors or officers
of the association amounting to fraud and misrepresentation which may be
detrimental to the interest of the public and/or of the members of the association
or the association registered with HIGC
b) Controversies arising out of intra-corporate relations between and among
members of the association, between any or all of them and the association of
which they are members; and between such association and the state/general
public or other entity in so far as it concerns its right to exist as a corporate entity.
x x x           x x x           x x x."
The aforesaid powers and responsibilities, which had been vested in the HIGC with respect to
homeowners’ associations, were later transferred to the Housing and Land Use Regulatory Board
(HLURB) pursuant to Republic Act 8763.15
Are Private Respondents SCHA Members?
In order to determine if the HIGC has jurisdiction over the dispute, it is necessary to resolve preliminarily
-- on the basis of the allegations in the Complaint -- whether private respondents are members of the
SCHA.
Petitioners contend that because the Complaint arose from intra-corporate relations between the SCHA
and its members, the HIGC therefore has no jurisdiction over the dispute. To support their contention
that private respondents are members of the association, petitioners cite the SCHA’s Articles of
Incorporation16 and By-laws17 which provide that all landowners of the Sta. Clara Subdivision are
automatically members of the SCHA.
We are not persuaded. The constitutionally guaranteed freedom of association 18 includes the
freedom not to associate.19 The right to choose with whom one will associate oneself is the very
foundation and essence of that partnership.20 It should be noted that the provision guarantees the right
to form an association. It does not include the right to compel others to form or join one.21
More to the point, private respondents cannot be compelled to become members of the SCHA by the
simple expedient of including them in its Articles of Incorporation and By-laws without their express or
implied consent. True, it may be to the mutual advantage of lot owners in a subdivision to band
themselves together to promote their common welfare. But that is possible only if the owners
voluntarily agree, directly or indirectly, to become members of the association. True also, memberships
in homeowners’ associations may be acquired in various ways -- often through deeds of sale, Torrens
certificates or other forms of evidence of property ownership. In the present case, however, other than
the said Articles of Incorporation and By-laws, there is no showing that private respondents have agreed
to be SCHA members.
As correctly observed by the CA:
"x x x. The approval by the SEC of the said documents is not an operative act which bestows
membership on the private respondents because the right to associate partakes of the nature
of freedom of contract which can be exercised by and between the homeowners amongst
themselves, the homeowners’ association and a homeowner, and the subdivision owner and
a homeowner/lot buyer x x x."22
6
No Privity of Contract
Clearly then, no privity of contract exists between petitioners and private respondents. As a general rule,
a contract is a meeting of minds between two persons. 23 The Civil Code upholds the spirit over the form;
thus, it deems an agreement to exist, provided the essential requisites are present. A contract is upheld
as long as there is proof of consent, subject matter and cause. Moreover, it is generally obligatory in
whatever form it may have been entered into. From the moment there is a meeting of minds between
the parties, it is perfected.24
As already adverted to, there are cases in which a party who enters into a contract of sale is also bound
by a lien annotated on the certificate of title. We recognized this in Bel Air Village Association, Inc. v.
Dionisio,25 in which we ruled:
"There is no dispute that Transfer Certificate of Title No. 81136 covering the subject parcel of
land issued in the name of the petitioner contains an annotation to the effect that the lot
owner becomes an automatic member of the respondent Bel-Air Association and must abide
by such rules and regulations laid down by the Association in the interest of the sanitation,
security and the general welfare of the community. It is likewise not disputed that the
provision on automatic membership was expressly annotated on the petitioner’s Transfer
Certificate of Title and on the title of his predecessor-in-interest.
"The question, therefore, boils down to whether or not the petitioner is bound by
such annotation.
"Section 39 of Art. 496 (The Land Registration Act) states:
‘Sec. 39. Every person receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land who takes a
certificate of title for value in good faith shall hold the same free of all
encumbrances except those noted on said certificate x x x.’" (Italics supplied)
The above ruling, however, does not apply to the case at bar. When private respondents purchased their
property in 1974 and obtained Transfer Certificates of Title Nos. T-126542 and T-127462 for Lots 11 and
12 of Block 37 along San Jose Avenue in Sta. Clara Subdivision, there was no annotation showing their
automatic membership in the SCHA. Thus, no privity of contract arising from the title certificate exists
between petitioners and private respondents.
Further, the records are bereft of any evidence that would indicate that private respondents intended to
become members of the SCHA. Prior to the implementation of the aforesaid Resolution, they and the
other homeowners who were not members of the association were issued non-member gate pass
stickers for their vehicles. This fact has not been disputed by petitioners. Thus, the SCHA recognized that
there were subdivision landowners who were not members thereof, notwithstanding the provisions of
its Articles of Incorporation and By-laws.
Jurisdiction Determined by Allegations in the Complaint
It is a settled rule that jurisdiction over the subject matter is determined by the allegations in the
complaint. Jurisdiction is not affected by the pleas or the theories set up by the defendant in an answer
or a motion to dismiss. Otherwise, jurisdiction would become dependent almost entirely upon the whims
of the defendant.26
The Complaint does not allege that private respondents are members of the SCHA. In point of fact, they
deny such membership. Thus, the HIGC has no jurisdiction over the dispute.
Petitioners likewise contend that even if private respondents are not members of the SCHA, an intra-
corporate controversy under the third type of dispute provided in Section 1(b) of Rule II of the HIGC
Rules exists. Petitioners posit that private respondents fall within the meaning of "general public." We
are not convinced.
First, the third type of dispute refers only to cases wherein an association’s right to exist as a corporate
entity is at issue. In the present case, the Complaint filed by private respondents refers to the SCHA’s
acts allegedly amounting to an impairment of their free access to their place of residence inside the Sta.
Clara Subdivision.27 The existence of SCHA as a corporate entity is clearly not at issue in the instant case.
Second, in United BF Homeowners’ Association v. BF Homes, Inc., 28 we held that Section 1(b), Rule II of
HIGC’s "Revised Rules of Procedure in the Hearing of Homeowners’ Disputes" was void. The HIGC went
beyond its lawful authority provided by law when it promulgated its revised rules of procedure. There
was a clear attempt to unduly expand the provisions of Presidential Decree 902-A. As provided by the
law, it is only the State -- not the "general public or other entity" -- that can question an association’s
franchise or corporate existence.29
To reiterate, the HIGC exercises limited jurisdiction over homeowners’ disputes. The law confines its
authority to controversies that arise from any of the following intra-corporate relations: (1) between and
among members of the association; (2) between any and/or all of them and the association of which
they are members; and (3) between the association and the state insofar as the controversy concerns its
right to exist as a corporate entity.30
It should be stressed that the Complaint here is for damages. It does not assert membership in the SCHA
as its basis. Rather, it is based on an alleged violation of their alleged right of access through the
subdivision and on the alleged embarrassment and humiliation suffered by the plaintiffs.
Second Issue:
Sufficiency of Cause of Action
Petitioners claim that the CA erred in not ordering the dismissal of the Complaint for lack of cause of
action. They argue that there was no allegation therein that private respondents were actually prevented
from entering the subdivision and gaining access to their residential abode.
This contention is untenable. A defendant moving to dismiss a complaint on the ground of lack of cause
of action is regarded as having hypothetically admitted all the factual averments in the complaint. The
test of the sufficiency of the allegations constituting the cause of action is whether, admitting the facts
alleged, the court can render a valid judgment on the prayers. 31 This test implies that the issue must be
passed upon on the basis of the bare allegations in the complaint. The court does not inquire into the
truth of such allegations and declare them to be false. To do so would constitute a procedural error and
a denial of the plaintiff’s right to due process.32
A complaint states a cause of action when it contains these three essential elements: (1) the legal right of
the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant
in violation of the said legal right.33
7
In the instant case, the records sufficiently establish a cause of action. First, the Complaint alleged that, The facts, as found by the Court of Appeals and as culled from the voluminous records of these cases,
under the Constitution, respondents had a right of free access to and from their residential may be stated as follows:
abode. Second, under the law, petitioners have the obligation to respect this right. Third, such right was
impaired by petitioners when private respondents were refused access through the Sta. Clara
In 1973, a religious group known as "The Church In Quezon City (Church Assembly Hall), Incorporated"
Subdivision, unless they showed their driver’s license for identification.
("CHURCH" for brevity), located at 140 Talayan St., Talayan Village, Quezon City, was organized as "an
entity of the brotherhood in Christ."1
Given these hypothetically admitted facts, the RTC, in the exercise of its original and exclusive
jurisdiction,34 could have rendered judgment over the dispute.
It was registered in the same year with the Securities and Exchange Commission (SEC) as a non-stock,
non-profit religious corporation for the administration of its temporalities or the management of its
We stress that, in rendering this Decision, this Court is not prejudging the main issue of whether, in truth properties.2
and in fact, private respondents are entitled to a favorable decision by the RTC. That will be made only
after the proper proceedings therein. Later on, if it is proven during the trial that they are indeed
The Articles of Incorporation and By-laws of the CHURCH decree that its affairs and operation shall be
members of the SCHA, then the case may be dismissed on the ground of lack of jurisdiction. We are
managed by a Board of Directors consisting of six (6) members,3 who shall be members of the CHURCH.4
merely holding that, on the basis of the allegations in the Complaint, (1) the RTC has jurisdiction over the
controversy and (2) the Complaint sufficiently alleges a cause of action. Therefore, it is not subject to
attack by a motion to dismiss on these grounds. As a "brotherhood in Christ," the CHURCH embraced the "Principles of Faith" that "every member or
officer" thereof "shall, without mental reservation, adhere strictly to the doctrine, teaching and faith
being observed by the (CHURCH) in proclaiming the Gospel of Christ, to save lost souls, to lead men in
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
worshipping the true God, in accordance with the Holy Bible and to believe:
petitioners.

(a) The Old and the New Testaments comprising the Holy Bible as inspired by God;
G.R. Nos. 134963-64            September 27, 2001

(b) The Trinity of the God-Head, which is God the Father, God the Son and God the Holy Spirit.
ALFREDO LONG and FELIX ALMERIA, petitioners,
vs.
LYDIA BASA, ANTHONY SAYHEELIAM and YAO CHEK, respondents. (c) That Jesus Christ, the only begotten Son of the Living God, conceived by the Virgin Mary
through the Holy Spirit, and possessing the nature of both God and man, and who died on the
cross to save mankind, was buried, rose again on the third day, has ascended up to heaven,
x---------------------------------------------------------x
and will come back to reign as King someday.

G.R. NOS. 135152-53 September 27, 2001

LIM CHE BOON, TAN HON KOC, JOSEPH LIM and LIU YEK SEE, petitioners,
vs.
LYDIA BASA, ANTHONY SAYHEELIAM and YAO CHEK, respondents.
x---------------------------------------------------------x
G.R. NO. 137135 September 27, 2001
LIM CHE BOON, TAN HON KOC, JOSEPH LIM and LIU YEK SEE, petitioners,
vs.
LYDIA BASA, ANTHONY SAYHEELIAM and YAO CHEK, respondents.
SANDOVAL-GUTIERREZ, J.:
These are consolidated cases involving a religious corporation whose Board of Directors had expelled
certain members thereof on purely spiritual or religious grounds since they refused to follow its
teachings and doctrines. The controversy here centers on the legality of the expulsion.
(d) That the only way to salvation is solely by trusting on the shed blood of Jesus and the
conviction of the Holy Spirit."5
Zealous in upholding and guarding their Christian faith, and to ensure unity and uninterrupted exercise
of their religious belief, the members of the CHURCH vested upon the Board of Directors the absolute
power "(to preserve and protect the(ir) faith"6 and to admit7 and expel8 a member of the CHURCH.
Admission for membership in the CHURCH is so exacting. Only "persons zealous of the Gospel, faithful in
Church work and of sound knowledge of the Truth, as the Board of Directors shall admit to membership,
shall be members of the (CHURCH)."9
The procedure for the expulsion of an erring or dissident member is prescribed in Article VII (paragraph
4) of the CHURCH By-laws, which provides that "If it is brought to the notice of the Board of Directors that
any member has failed to observe any regulations and By-laws of the Institution (CHURCH) or the
conduct of any member has been dishonorable or improper or otherwise injurious to the character and
interest of the Institution, the Board of Directors may b(y) resolution without assigning any reason
therefor expel such member from such Institution and he shall then forfeit his interest, rights and
privileges in the Institution."
As early as 1988, the Board of Directors observed that certain members of the CHURCH, including
petitioners herein, exhibited "conduct which was dishonorable, improper and injurious to the character
8
and interest of the (CHURCH)"10 by "introducing (to the members) doctrines and teachings which were On September 29, 1993, petitioners Lim Che Boon, Tan Hon Koc, Joseph Lim, Liu Yek See and others
not based on the Holy Bible" and the Principles of Faith embraced by the CHURCH. 11 questioned their expulsion by filing with the SEC Securities Investigation and Clearing Department a
petition,25 docketed as SEC Case No. 09-93-4581 (and later a supplemental petition) against Directors Yao
Chek, Leandro Basa, Lydia Basa and Anthony Sayheeliam. It sought mainly the annulment of the August
Confronted with this situation, the respondents, as members of the Board of Directors, and some
30, 1993 membership list and the reinstatement of the original list on the ground that the expulsion was
responsible members of the CHURCH, advised the petitioners "to correct their ways" 12 and reminded
made without prior notice and hearing. The case was assigned to SEC Hearing Officer Manuel Perea (the
them "that under the By-laws, this organization is only for worshipping the true God, not to worship
"Perea case").
Buddha or men."13 The respondents also warned them that if they persist in their highly improper
conduct, they will be dropped from the membership of the CHURCH. 14
The petition also prayed for the issuance of a temporary restraining order (TRO) and a writ of preliminary
injunction principally to enjoin the Board of Directors from holding any election of a new set of directors
These exhortations and warnings to the erring members were made during Sunday worship gatherings,
among the members named in the August 30, 1993 list of corporate membership.
"in small group meetings and even one-on-one personal talk with them." 15 Since 1988,16 these warnings
were announced by the members of the Board "(s)ometimes once a week (when they) meet together." 17
After conducting a hearing on the application for a writ of preliminary injunction, SEC Hearing Officer
Manuel Perea denied the same in an order dated February 22, 1994.26 Perea ruled inter alia that the
But petitioners ignored these repeated admonitions.
expulsion was in accordance with the aforequoted provisions of paragraph 4, Article VII of the CHURCH
By-laws, reasoning that "the notice referred to (in par. 4) is notice to the Board of Directors of the
Alarmed that petitioners' conduct will continue to undermine the integrity of the Principles of Faith of grounds for expulsion enumerated therein and not notice to the (erring) members…." 27
the CHURCH, the Board of Directors, during its August 30, 1993 regular meeting 18 held for the purpose of
reviewing and updating the membership list of the CHURCH, removed from the said list certain names of
Perea's order further stated: "It is also clear (from par. 4) that the resolution of expulsion need not state
members, including the names of herein petitioners Joseph Lim, Liu Yek See, Alfredo Long and Felix
the reason for expelling a member."28
Almeria.19 They were removed for espousing doctrines inimical or injurious to the Principles of Faith of
the CHURCH. The Board also updated the list by removing the names of those who have migrated to
other countries, those deceased and those whom the CHURCH had lost contact with. 20 The resolution Petitioners elevated Perea's order of February 22, 1994 to the SEC en banc via a petition for certiorari,
adopted by the Board in that August 30, 1993 meeting reads in part: docketed as SEC EB Case No. 389.29 The SEC, in an en banc decision dated July 11, 1994,30 affirmed the
Perea ruling and "dismissed for lack of merit" the petition.
"Director Anthony Sayheeliam announced that the regular meeting is to review, update and
approve the list of corporate membership. After due deliberation and upon motion duly made Petitioners did not appeal from the decision of the SEC en banc.31
and seconded, the following resolutions were approved and adopted:
Since the said SEC en banc decision pertains only to the preliminary injunction incident, the SEC, through
"RESOLVED, AS IT IS HEREBY RESOLVED, that the list of corporate membership of this a hearing panel, conducted further proceedings to hear and decide the permissive counterclaim and
Institution as shown on Annex "A" is hereby reviewed, updated and approved by the Board. third-party complaint incorporated in respondents' supplemental answer, including their prayer for
injunctive relief to prevent petitioners from interfering and usurping the functions of the Board of
Directors.32
"RESOLVED, FURTHER, AS IT IS HEREBY FURTHER RESOLVED, that the Board approved that
those who are not included in the said list of corporate membership of this Institution are no
longer considered as a corporate member of this Institution. Petitioners subsequently filed motions to dismiss/strike out the counterclaim and third-party complaint.
But the motions were denied by the hearing panel in its omnibus order dated October 2, 1995. The said
order also declined to act on respondents’ third-party complaint’s prayer for injunctive relief since "there
"RESOLVED, FINALLY, AS IT IS HEREBY RESOLVED, that any or all previous lists of membership
is a case pending before another Hearing Officer in SEC Case No. 4994 for the declaration of nullity of the
are hereby superseded, revoked and/or rendered null, void and of no effect..
general membership meeting held on February 12, 1995."33

"There being no further business and no other matter to transact, the meeting was thereupon
Upon denial of the separate motions for reconsideration of both parties, the respondents filed with the
adjourned."21
SEC en banc a petition for review on certiorari, docketed as SEC EB Case No. 484. A review of the records
show that the issue posed in this case is also the validity of the questioned expulsion already resolved by
All the then six (6) members of the Board, namely, Directors Lim Che Boon, Tan Hon Koc (herein the SEC en banc in its decision dated July 11, 1994 in SEC EB Case No. 389 which had attained finality.
petitioners), Anthony Sayheeliam, Leandro Basa, Yao Chec and Lydia L. Basa (herein respondents) "were
duly informed" of that meeting.22 However, Directors Lim Che Boon and Tan Hon Koc did not
On July 31, 1996, the SEC en banc, by a vote of two to one, with one Commissioner abstaining, issued
appear.23 Thus, the above-quoted resolution was signed only by Directors Anthony Sayheeliam, Leandro
an order in SEC EB Case No. 484, setting aside the expulsion of certain members of the CHURCH
Basa, Yao Chec and Lydia L. Basa who composed the majority of the Board.
approved by its Board of Directors on August 30, 1993 for being void and ordering the reinstatement of
petitioners as members of the CHURCH.
The updated membership list approved by the Board on August 30, 1993, together with the minutes of
the meeting, were duly filed with the SEC on September 13, 1993.24
9
Promptly, herein respondents Anthony Sayheeliam and Lydia Basa filed a petition for review with the
Court of Appeals, docketed as CA-G.R. SP No. 41551,34 assailing the July 31, 1996 order.
Respondent Yao Check, for his part, filed a motion for reconsideration of the order of July 31, 1996. Upon
denial of his motion, he also filed with the Court of Appeals a petition for review, docketed as CA-G.R. SP
No. 43389. This case was consolidated with CA-G.R. SP No. 41551.35
On May 29, 1998, the Court of Appeals promulgated its now assailed decision granting respondents’
consolidated petitions and reversing the July 31, 1996 order of the SEC en banc in SEC EB Case No. 484.
Petitioners filed a motion for reconsideration but was denied by the appellate court in a resolution dated
August 18, 1998.36
Hence, the present consolidated petitions for review by Certiorari (G.R. Nos. 134963-64 and G.R. Nos.
135152-53) under Rule 45 of the 1997 Rules of Civil Procedure, as amended.
The pith issue in the instant cases, as correctly defined by the Court of Appeals in its challenged decision
and resolution, is whether the expulsion of petitioners Joseph Lim, Liu Yek See, Alfredo Long and Felix
Almeria from the membership of the CHURCH by its Board of Directors through a resolution issued on
August 30, 1993 is in accordance with law.
Petitioners insist that the expulsion is void since it was rendered without prior notice to them or, in a
constitutional context, without due process.
On the other hand, respondents assert that the expulsion is in accordance with the By-laws of the
CHURCH.
We rule against the petitioners.
It must be emphasized that the issue of the validity of the expulsion had long been resolved and declared
valid by the SEC en banc in its decision dated July 11, 1994 in SEC EB Case No. 389. The decision affirmed
the order dated February 22, 1994 of SEC Hearing Officer Manuel Perea in SEC Case No. 09-93-4581. The
petitioners themselves admitted in their present petition that they did not appeal anymore from the July
11, 1994 decision of the SEC en banc,37 thereby rendering the same final and conclusive. As such, the
expulsion order is now inextricably binding on the parties concerned and can no longer be modified,
much less reversed.
What was definitely resolved in the Perea decision and in SEC EB Case No. 389 was the validity of the
expulsion proceedings conducted by the Board of Directors in its meeting on August 30, 1993 wherein a
Resolution updating the membership list of the CHURCH was approved. On the other hand, the SEC
hearing panel conducted further proceedings only to decide the permissive counterclaim and third-party
complaint incorporated in respondents’ supplemental answer, including their prayer for injunctive relief
to prevent petitioners from interfering and usurping the functions of the Board of Directors.
Thus, we find accurate the following findings and conclusion of the Court of Appeals on this matter:
"….It ought to be recalled that when Hearing Officer Perea denied the herein respondents’
(now petitioners’) prayer for injunctive relief in SEC Case No. 09-93-4581 to stop the herein
petitioners (now respondents) from calling a membership meeting on the basis of the
expurgated list of membership dated August 30, 1993, they interposed in SEC EB Case No.
389 a petition to review the order of denial. Then and there, the SEC en banc rendered its
decision dated July 11, 1994 sustaining Hearing Officer Perea on the ratiocination that the
expulsion of members effected on August 30, 1993 by the board of directors was valid
having been done in accordance with the bay-laws of the CHURCH, and although the herein
respondents (now petitioners) subsequently sought the dismissal of SEC Case No. 09-93-
4581, the order of dismissal explicitly stated that it did not encompass the herein
petitioners’ (now respondents’) permissive counterclaim and third-party complaint. Thus,
further proceedings were conducted which culminated in the issuance of the Hearing
Panel’s Omnibus Orders dated October 2, 1995 and January 19, 1996, which were elevated,
this time by the herein petitioners (now respondents), to the SEC en banc in a petition for
review on certiorari docketed as SEC EB Case No. 484. It was in this latter case that the
SEC en banc handed down its assailed order of July 31, 1996 in violation of the law of the
case that was earlier laid down with finality in SEC EB Case No. 389.
x x x           x x x           x x x
"Thusly, the question on the validity of the expulsion of some of the members of the
CHURCH was squarely raised and frontally resolved in the decision rendered in SEC EB Case
No. 389."38 (Emphasis ours)
Clearly, the issuance by the SEC en banc of its July 31, 1996 order in SEC EB Case No. 484,
which reopened the very same issue of the validity of the expulsion proceedings, completely
reversing its final and executory en banc decision of July 11, 1994 (SEC EB Case No. 389), is certainly in
gross disregard of the rules and basic legal precept that accord finality to administrative, quasi-judicial
and judicial determinations.
The Court of Appeals is, therefore, correct in voiding the SEC en banc orders dated July 31, 1996 and
January 29, 1997 in SEC EB Case No. 484, thereby upholding the expulsion of petitioners and others by
the Board of Directors on August 30, 1993.
In this regard, what we said in Fortich vs. Corona, et al.39 bears repeating: "The orderly administration of
justice requires that the judgments/resolutions of a court or quasi-judicial body must reach a point of
finality set by the law, rules and regulations. The noble purpose is to write finis to disputes once and for
all. This is a fundamental principle in our justice system, without which there would be no end to
litigations. Utmost respect and adherence to this principle must always be maintained by those who
wield the power of adjudication. Any act which violates such principle must immediately be struck
down."40
Let it not be said that the denial of the present petitions, even on this ground alone, is a mere
technicality. In the aforecited case of Fortich vs. Corona, we held that once a case had been resolved with
finality, vested rights were acquired by the winning party.41 Consequently, the rule on finality of
decisions, orders or resolutions of a judicial, quasi-judicial or administrative body is "not a question of
technicality but of substance and merit,"42 the underlying consideration therefor being the protection of
the substantive rights of the winning party.43 In the succinct words of Mr. Justice Artemio V. Panganiban
in the case of Videogram Regulatory Board vs. Court of Appeals, et al.,44 "Just as a losing party has the
right to file an appeal within the prescribed period, the winning party also has the correlative right to
enjoy the finality of the resolution of his/her case.’’
Be that as it may, we find baseless petitioners’ claim that their expulsion was executed without prior
notice or due process.
10
In the first place, the By-laws of the CHURCH, which the members have expressly adhered to,
does not require the Board of Directors to give prior notice to the erring or dissident members in cases of
expulsion. This is evident from the procedure for expulsion prescribed in Article VII (paragraph 4) of the
By-laws, which reads:
"4. If it is brought to the notice of the Board of Directors that any member has failed to
observe any regulations and By-laws of the Institution (CHURCH) or the conduct of any
member has been dishonorable or improper or otherwise injurious to the character and
interest of the Institution, the Board of Directors may b(y) resolution without assigning any
reason therefor expel such member from such Institution and he shall then forfeit his interest,
rights and privileges in the Institution." (Emphasis ours)
From the above-quoted By-law provision, the only requirements before a member can be expelled or
removed from the membership of the CHURCH are: (a) the Board of Directors has been notified that a
member has failed to observe any regulations and By-laws of the CHURCH, or the conduct of any
member has been dishonorable or improper or otherwise injurious to the character and interest of the
CHURCH, and (b) a resolution is passed by the Board expelling the member concerned, without assigning
any reason therefor.
It is thus clear that a member who commits any of the causes for expulsion enumerated in paragraph 4
of Article VII may be expelled by the Board of Directors, through a resolution, without giving that erring
member any notice prior to his expulsion. The resolution need not even state the reason for such action.
The CHURCH By-law provision on expulsion, as phrased, may sound unusual and objectionable to
petitioners as there is no requirement of prior notice to be given to an erring member before he can be
expelled. But that is how peculiar the nature of a religious corporation is vis-à-vis an ordinary corporation
organized for profit. It must be stressed that the basis of the relationship between a religious corporation
and its members is the latter’s absolute adherence to a common religious or spiritual belief. Once this
basis ceases, membership in the religious corporation must also cease. Thus, generally, there is no room
for dissension in a religious corporation. And where, as here, any member of a religious corporation is
expelled from the membership for espousing doctrines and teachings contrary to that of his church, the
established doctrine in this jurisdiction is that such action from the church authorities is conclusive upon
the civil courts. As far back in 1918, we held in United States vs. Canete45 that:
"…in matters purely ecclesiastical the decisions of the proper church tribunals
are conclusive upon the civil tribunals. A church member who is expelled from the
membership by the church authorities, or a priest or minister who is by them deprived of his
sacred office, is without remedy in the civil courts, which will not inquire into the correctness
of the decisions of the ecclesiastical tribunals."46 (Emphasis ours)
Obviously recognizing the peculiarity of a religious corporation, the Corporation Code leaves the matter
of ecclesiastical discipline to the religious group concerned.
Section 91 of the Corporation Code, which has been made explicitly applicable to religious corporations
by the second paragraph of Section 109 of the same Code, states:
"SEC. 91. Termination of membership.- Membership shall be terminated in the manner and
for the causes provided in the articles of incorporation or the by-laws. Termination of
membership shall have the effect of extinguishing all rights of a member in the corporation or
in its property, unless otherwise provided in the articles of incorporation or the by-laws."
(Emphasis ours)
Moreover, the petitioners really have no reason to bewail the lack of prior notice in the By-laws. As
correctly observed by the Court of Appeals, they have waived such notice by adhering to those By-laws.
They became members of the CHURCH voluntarily. They entered into its covenant and subscribed to its
rules. By doing so, they are bound by their consent.47
Even assuming that petitioners' expulsion falls within the Constitutional provisions on "prior notice" or
"due process," still we can not conclude that respondents committed a constitutional infraction. It bears
emphasis that petitioners were given more than sufficient notice of their impending expulsion, as shown
by the records.
We have narrated earlier the events which led to the questioned expulsion. From
the undisputed testimony of Director Anthony Sayheeliam (now respondent), it is clear that, as early as
1988, the respondents-Board of Directors patiently and persistently reminded, advised and exhorted the
erring members, including herein petitioners, to stop espousing doctrines, teachings and religious belief
diametrically opposed to the Principles of Faith embraced by the CHURCH. The respondents-Board of
Directors further warned them during Sunday worship gatherings, in small group meetings and one-on-
one talk, that they would face disciplinary action and be dropped from the membership roll should they
continue to exhibit acts inimical and injurious to the teachings of the Holy Bible which the CHURCH so
zealously upholds.
When they ignored petitioners’ exhortations and warnings, the erring members should not now
complain about their expulsion from the membership of the CHURCH by the Board of Directors on
August 30, 9193.
The Court of Appeals, whose findings of fact is accorded great respect as the same is conclusive on us,
made a precise observation on this matter:
"….the petitioners (now respondents) further state that the Board of Directors, before
deciding to purge their list of membership, gave the erring members sufficient warning of
their impending ouster. Thus:
‘… the records of the instant case indisputably show that the erring members of
the corporation, including respondents (now petitioners) Lim Che Boon, Joseph
Lim, Tan Hon Joc, Liu Yek See, Felix Almeria and Alfredo Long, were given more
than sufficient notice that the perpetration of acts inimical to and inconsistent
with the Articles of Faith of the Corporation will be subject to disciplinary authority
of the Board of Directors:
(Testimony of Anthony Sayheeliam, member of the Board of Directors)
Q.         You mentioned that former members of the Corporation were dropped or expelled
due to violations of the principles of faith under the Articles of Incorporation and the By-laws,
as well as for conduct which was dishonorable, improper and injurious to the character and
interest of the corporation. When did the Board first note or observe these violations?
A.         The Board noticed that since 1988.
Q.         As a member of the Board of Directors, what actions did you take after the board
observed these violations?
11
A.         We warned them and advised them to correct their ways of doing these things.
Q.         As a member of the Board of Directors, what did you say or do in order to convince
these former members to correct their ways?
A.         We told them that under the By-laws this organization is only for worshipping the true
God, not to worship Buddha or men.
Q.         You also mentioned that you gave warnings to these errant members. As a member of
the Board of Directors, what did you do or say to warn these former members of the
consequences of their acts?
A.         Especially to the members of the organization, they should take all the consequences.
Otherwise, they will be dropped.
Q.         These warnings and statements advising them to correct their way, on what occasion
were these statements made?
A.         In a general service, Sunday, and also in small group meetings and even one-on-one,
personally talking with them.
Q.         How often were these warnings or advise to correct made?
A.         Sometimes once a week we meet together.
Q.         Since when?
A.         Since 1988." (TSN, December 1, 1993, Perea Case, pp. 9-12).
From the foregoing testimony of petitioner (now respondent) Anthony Sayheeliam during
the hearing in the Perea Case on 01 December 1993, it remains undisputed that as early as
1988 private respondents (now petitioners) and their cohorts knew that their acts and
conduct would be subject to disciplinary action. In fact, private respondents (now
petitioners) never specifically denied or disputed the testimony of petitioner (now
respondent) Anthony Sayheeliam, whether on the witness stand or in any pleading in the
Perea Case or in the other cases between the parties, that they have been repeatedly
admonished by the members of the Board of Directors that the introduction of teachings
and doctrines inconsistent with the Principles of Faith of the Corporation is punishable with
their expulsion (Rollo, CA-G.R. SP No. 41551, pp. 46-48.
"We find the stance of the petitioners (now respondents) more persuasive as it is more in
accord with Section 91 of the Corporation Code which mandates that membership in a no-
stock corporation and, for that matter, in a religious corporation ‘shall be terminated in the
manner and for the causes enumerated in the articles of incorporation or by-laws.’ The
respondents (now petitioners) make no protestation that the CHURCH’s by-law provision on
expulsion has not been complied with…."48 (Emphasis ours)
Consequently, the expulsion was not tainted with any arbitrary treatment from the members of the
Board of Directors who, since 1988 up to August 30, 1993, or approximately five (5) years, have patiently
exhorted and warned the dissident members. This long period of time is more than adequate an
opportunity for the erring members and their followers to contemplate upon their covenant with the
CHURCH on their duty to protect and promote its Principles of Faith and not to violate them. It is a well-
settled principle in law that what due process contemplates is freedom from arbitrariness; what it
requires is fairness and justice; substance, rather than the form, being paramount. What it prohibits is
not the absence of previous notice but the absolute absence thereof. 49 A formal or trial type hearing is
not at all times and in all instances essential.50
Clearly, although the By-laws of the CHURCH do not require the Board of Directors to give notice to the
dissident petitioners of their impending expulsion, more than sufficient notice was given to them before
they were expelled by the Board on August 30, 1993.
Petitioners, however, contend that the expelled members were not actually notified and warned of their
impending expulsion. In support of this, they also cited the following testimony of Anthony Sayheeliam:
"ATTY. PAULITE:
Q.         Did you go through the list one by one?
A.         Yes.
Q.         So do you remember how many were expelled because of conduct dishonorable,
improper, injurious to the corporation?
A.         At the time we did not count the number. We just talked it one by one, discussed …
Q.         Okey, Did you notify them of the grounds for their expulsion?
A.         No.
Q.         You did not. Did you give them an opportunity to defend themselves?
A.         No."51 (Emphasis ours)
Petitioners’ interpretation of the above-quoted testimony of Anthony Sayheeliam was out of context.
The question and answer focused on what the Board of Directors did during its meeting on August 30,
1993 wherein it evaluated each member’s standing and conduct in the light of the grounds for
disciplinary action as provided in the CHURCH By-laws. This is plain from the underscored portions of
Sayheeliam’s testimony. Thus, what Sayheeliam was saying is that on that very day of the expulsion, the
Board of Directors did not notify the expelled members anymore. Obviously, such notice was not made
by the Board of Directors simply because the By-laws of the CHURCH does not require the same, as
already discussed earlier.
Incidentally, during the pendency of these cases in this Court, petitioners filed an application for a
TRO/writ of preliminary injunction dated November 10, 1998, claiming therein that respondents are
denying them access to the premises of the CHURCH for purposes of exercising their right of worship.
12
Acting on the application, this Court required the respondents to comment thereon. In the meantime, it
issued a Special Order on December 18, 1998 enjoining the respondents from enforcing the Court of
Appeals’ decision "insofar as petitioners’ rights and privileges as members of the CHURCH are
concerned." Accordingly, petitioners were allowed "entry into the CHURCH building of worship
and participate in its religious and social activities."
On January 29, 1999, petitioners Lim Che Boon, Tan Hon Koc, Joseph Lim and Liu Yek See filed a petition
to cite respondents in contempt for refusing to comply with the Special Order of this Court. This was
docketed as G.R. No. 137135. Petitioners averred therein that respondents denied them access to the
worship halls for their special conference involving the spiritual training of some 1, 800 college students
from Regions I to VI.
In their comment, respondents opposed the petition, claiming that their refusal to lend the worship halls
was due to the fact that the intended special conference is not a religious service/activity of the
CHURCH and the participants are not members of the CHURCH. Thus, respondents assert that they did
not violate the Special Order of this Court.
We agree with the respondents. The Special Order allows petitioners entry into the CHURCH building to
"participate in worship or other religious activities" "as members of the CHURCH". Clearly, the Special
Order does not allow petitioners unlimited or unrestrained access or use of the premises and properties
of the CHURCH. The intended special conference to be conducted by petitioners is not a CHURCH activity
and the participants therein are not members of the CHURCH.
WHEREFORE, the present consolidated petitions are DENIED. The assailed decision of the Court of
Appeals dated May 29, 1998 and its resolution dated August 18, 1998 are AFFIRMED. Costs against
petitioners.
The Special Order dated December 18, 1998 issued by this Court is LIFTED.
G.R. No. 153468 August 17, 2006
PAUL LEE TAN, ANDREW LIUSON, ESTHER WONG, STEPHEN CO, JAMES TAN, JUDITH TAN, ERNESTO
TANCHI JR., EDWIN NGO, VIRGINIA KHOO, SABINO PADILLA JR., EDUARDO P. LIZARES and GRACE
CHRISTIAN HIGH SCHOOL, Petitioners,
vs.
PAUL SYCIP and MERRITTO LIM, Respondents.
DECISION
PANGANIBAN, CJ.:
For stock corporations, the "quorum" referred to in Section 52 of the Corporation Code is based on the
number of outstanding voting stocks. For nonstock corporations, only those who are actual, living
members with voting rights shall be counted in determining the existence of a quorum during members’
meetings. Dead members shall not be counted.
The Case
The present Petition for Review on Certiorari [1] under Rule 45 of the Rules of Court seeks the reversal of
the January 23 2 and May 7, 2002, 3 Resolutions of the Court of Appeals (CA) in CA-GR SP No. 68202. The
first assailed Resolution dismissed the appeal filed by petitioners with the CA. Allegedly, without the
proper authorization of the other petitioners, the Verification and Certification of Non-Forum Shopping
were signed by only one of them -- Atty. Sabino Padilla Jr. The second Resolution denied reconsideration.
The Facts
Petitioner Grace Christian High School (GCHS) is a nonstock, non-profit educational corporation with
fifteen (15) regular members, who also constitute the board of trustees. [4] During the annual members’
meeting held on April 6, 1998, there were only eleven (11) [5] living member-trustees, as four (4) had
already died. Out of the eleven, seven (7) 6 attended the meeting through their respective proxies. The
meeting was convened and chaired by Atty. Sabino Padilla Jr. over the objection of Atty. Antonio C. Pacis,
who argued that there was no quorum. 7 In the meeting, Petitioners Ernesto Tanchi, Edwin Ngo, Virginia
Khoo, and Judith Tan were voted to replace the four deceased member-trustees.
When the controversy reached the Securities and Exchange Commission (SEC), petitioners maintained
that the deceased member-trustees should not be counted in the computation of the quorum because,
upon their death, members automatically lost all their rights (including the right to vote) and interests in
the corporation.
SEC Hearing Officer Malthie G. Militar declared the April 6, 1998 meeting null and void for lack of
quorum. She held that the basis for determining the quorum in a meeting of members should be their
number as specified in the articles of incorporation, not simply the number of living members. 8 She
explained that the qualifying phrase "entitled to vote" in Section 24 9 of the Corporation Code, which
provided the basis for determining a quorum for the election of directors or trustees, should be read
together with Section 89. 10
The hearing officer also opined that Article III (2) 11 of the By-Laws of GCHS, insofar as it prescribed the
mode of filling vacancies in the board of trustees, must be interpreted in conjunction with Section
29 12 of the Corporation Code. The SEC en banc denied the appeal of petitioners and affirmed the
Decision of the hearing officer in toto. 13 It found to be untenable their contention that the word
"members," as used in Section 52 14 of the Corporation Code, referred only to the living members of a
nonstock corporation. 15
As earlier stated, the CA dismissed the appeal of petitioners, because the Verification and Certification of
Non-Forum Shopping had been signed only by Atty. Sabino Padilla Jr. No Special Power of Attorney had
been attached to show his authority to sign for the rest of the petitioners.
Hence, this Petition. 16
Issues
Petitioners state the issues as follows:
"Petitioners principally pray for the resolution of the legal question of whether or not in NON-STOCK
corporations, dead members should still be counted in determination of quorum for purposed of
conducting the Annual Members’ Meeting.
13
"Petitioners have maintained before the courts below that the DEAD members should no longer be
counted in computing quorum primarily on the ground that members’ rights are ‘personal and non-
transferable’ as provided in Sections 90 and 91 of the Corporation Code of the Philippines.
"The SEC ruled against the petitioners solely on the basis of a 1989 SEC Opinion that did not even involve
a non-stock corporation as petitioner GCHS.
"The Honorable Court of Appeals on the other hand simply refused to resolve this question and instead
dismissed the petition for review on a technicality – the failure to timely submit an SPA from the
petitioners authorizing their co-petitioner Padilla, their counsel and also a petitioner before the Court of
Appeals, to sign the petition on behalf of the rest of the petitioners.
"Petitioners humbly submit that the action of both the SEC and the Court of Appeals are not in accord
with law particularly the pronouncements of this Honorable Court in Escorpizo v. University of
Baguio (306 SCRA 497), Robern Development Corporation v. Quitain (315 SCRA 150,) and MC
Engineering, Inc. v. NLRC, (360 SCRA 183). Due course should have been given the petition below and the
merits of the case decided in petitioners’ favor." 17
In sum, the issues may be stated simply in this wise: 1) whether the CA erred in denying the Petition
below, on the basis of a defective Verification and Certification; and 2) whether dead members should
still be counted in the determination of the quorum, for purposes of conducting the annual members’
meeting.
The Court’s Ruling
The present Petition is partly meritorious.
Procedural Issue:
Verification and Certification of Non-Forum Shopping
The Petition before the CA was initially flawed, because the Verification and Certification of Non-Forum
Shopping were signed by only one, not by all, of the petitioners; further, it failed to show proof that the
signatory was authorized to sign on behalf of all of them. Subsequently, however, petitioners submitted
a Special Power of Attorney, attesting that Atty. Padilla was authorized to file the action on their
behalf. 18
In the interest of substantial justice, this initial procedural lapse may be excused. 19 There appears to be
no intention to circumvent the need for proper verification and certification, which are aimed at assuring
the truthfulness and correctness of the allegations in the Petition for Review and at discouraging forum
shopping. 20 More important, the substantial merits of petitioners’ case and the purely legal question
involved in the Petition should be considered special circumstances 21 or compelling reasons that justify
an exception to the strict requirements of the verification and the certification of non-forum shopping. 22
Main Issue:
Basis for Quorum
Generally, stockholders’ or members’ meetings are called for the purpose of electing directors or
trustees 23 and transacting some other business calling for or requiring the action or consent of the
shareholders or members, 24 such as the amendment of the articles of incorporation and bylaws, sale or
disposition of all or substantially all corporate assets, consolidation and merger and the like, or any other
business that may properly come before the meeting.
Under the Corporation Code, stockholders or members periodically elect the board of directors or
trustees, who are charged with the management of the corporation. 25 The board, in turn, periodically
elects officers to carry out management functions on a day-to-day basis. As owners, though, the
stockholders or members have residual powers over fundamental and major corporate changes.
While stockholders and members (in some instances) are entitled to receive profits, the management
and direction of the corporation are lodged with their representatives and agents -- the board of
directors or trustees. 26 In other words, acts of management pertain to the board; and those of
ownership, to the stockholders or members. In the latter case, the board cannot act alone, but must seek
approval of the stockholders or members. 27
Conformably with the foregoing principles, one of the most important rights of a qualified shareholder or
member is the right
to vote -- either personally or by proxy -- for the directors or trustees who are to manage the corporate
affairs. 28 The right to choose the persons who will direct, manage and operate the corporation is
significant, because it is the main way in which a stockholder can have a voice in the management of
corporate affairs, or in which a member in a nonstock corporation can have a say on how the purposes
and goals of the corporation may be achieved. 29 Once the directors or trustees are elected, the
stockholders or members relinquish corporate powers to the board in accordance with law.
In the absence of an express charter or statutory provision to the contrary, the general rule is that every
member of a nonstock corporation, and every legal owner of shares in a stock corporation, has a right to
be present and to vote in all corporate meetings. Conversely, those who are not stockholders or
members have no right to vote. 30 Voting may be expressed personally, or through proxies who vote in
their representative capacities. 31 Generally, the right to be present and to vote in a meeting is
determined by the time in which the meeting is held. 32
Section 52 of the Corporation Code states:
"Section 52. Quorum in Meetings. – Unless otherwise provided for in this Code or in the by-laws, a
quorum shall consist of the stockholders representing a majority of the outstanding capital stock or a
majority of the members in the case of non-stock corporations."
In stock corporations, the presence of a quorum is ascertained and counted on the basis of the
outstanding capital stock, as defined by the Code thus:
"SECTION 137. Outstanding capital stock defined. – The term ‘outstanding capital stock’ as used in this
Code, means the total shares of stock issued under binding subscription agreements to subscribers or
stockholders, whether or not fully or partially paid, except treasury shares." (Underscoring supplied)
The Right to Vote in
Stock Corporations
14
The right to vote is inherent in and incidental to the ownership of corporate stocks. 33 It is settled that
unissued stocks may not be voted or considered in determining whether a quorum is present in a
stockholders’ meeting, or whether a requisite proportion of the stock of the corporation is voted to
adopt a certain measure or act. Only stock actually issued and outstanding may be voted. 34 Under
Section 6 of the Corporation Code, each share of stock is entitled to vote, unless otherwise provided in
the articles of incorporation or declared delinquent 35 under Section 67 of the Code.
Neither the stockholders nor the corporation can vote or represent shares that have never passed to the
ownership of stockholders; or, having so passed, have again been purchased by the corporation. 36 These
shares are not to be taken into consideration in determining majorities. When the law speaks of a
given proportion of the stock, it must be construed to mean the shares that have passed from the
corporation, and that may be voted. 37
Section 6 of the Corporation Code, in part, provides:
"Section 6. Classification of shares. – The shares of stock of stock corporations may be divided into
classes or series of shares, or both, any of which classes or series of shares may have such rights,
privileges or restrictions as may be stated in the articles of incorporation: Provided, That no share may
be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares,
unless otherwise provided in this Code: Provided, further, that there shall always be a class or series of
shares which have complete voting rights.
xxxxxxxxx
"Where the articles of incorporation provide for non-voting shares in the cases allowed by this Code, the
holders of such shares shall nevertheless be entitled to vote on the following matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the
corporation property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or other corporations;
7. Investment of corporate funds in another corporation or business in accordance with this Code; and
8. Dissolution of the corporation.
"Except as provided in the immediately preceding paragraph, the vote necessary to approve a particular
corporate act as provided in this Code shall be deemed to refer only to stocks with voting rights."
Taken in conjunction with Section 137, the last paragraph of Section 6 shows that the intention of the
lawmakers was to base the quorum mentioned in Section 52 on the number of outstanding voting
stocks. 38
The Right to Vote in
Nonstock Corporations
In nonstock corporations, the voting rights attach to membership. 39 Members vote as persons, in
accordance with the law and the bylaws of the corporation. Each member shall be entitled to one vote
unless so limited, broadened, or denied in the articles of incorporation or bylaws. 40 We hold that when
the principle for determining the quorum for stock corporations is applied by analogy to nonstock
corporations, only those who are actual members with voting rights should be counted.
Under Section 52 of the Corporation Code, the majority of the members representing the actual number
of voting rights, not
the number or numerical constant that may originally be specified in the articles of incorporation,
constitutes the quorum. 41
The March 3, 1986 SEC Opinion 42 cited by the hearing officer uses the phrase "majority vote of the
members"; likewise Section 48 of the Corporation Code refers to 50 percent of 94 (the number of
registered members of the association mentioned therein) plus one. The best evidence of who are the
present members of the corporation is the "membership book"; in the case of stock corporations, it is
the stock and transfer book. 43
Section 25 of the Code specifically provides that a majority of the directors or trustees, as fixed in the
articles of incorporation, shall constitute a quorum for the transaction of corporate business (unless the
articles of incorporation or the bylaws provide for a greater majority). If the intention of the lawmakers
was to base the quorum in the meetings of stockholders or members on their absolute number as fixed
in the articles of incorporation, it would have expressly specified so. Otherwise, the only logical
conclusion is that the legislature did not have that intention.
Effect of the Death
of a Member or Shareholder
Having thus determined that the quorum in a members’ meeting is to be reckoned as the actual number
of members of the corporation, the next question to resolve is what happens in the event of the death of
one of them.
In stock corporations, shareholders may generally transfer their shares. Thus, on the death of a
shareholder, the executor or administrator duly appointed by the Court is vested with the legal title to
the stock and entitled to vote it. Until a settlement and division of the estate is effected, the stocks of the
decedent are held by the administrator or executor. 44
On the other hand, membership in and all rights arising from a nonstock corporation are personal and
non-transferable, unless the articles of incorporation or the bylaws of the corporation provide
otherwise. 45 In other words, the determination of whether or not "dead members" are entitled to
15
exercise their voting rights (through their executor or administrator), depends on those articles of WHEREFORE, the Petition is partly GRANTED.The assailed Resolutions of the Court of Appeals are hereby
incorporation or bylaws. REVERSED AND SET ASIDE. The remaining members of the board of trustees of Grace Christian High
School (GCHS) may convene and fill up the vacancies in the board, in accordance with this Decision. No
pronouncement as to costs in this instance.
Under the By-Laws of GCHS, membership in the corporation shall, among others, be terminated by the
death of the member. 46 Section 91 of the Corporation Code further provides that termination
extinguishes all the rights of a member of the corporation, unless otherwise provided in the articles of SO ORDERED.
incorporation or the bylaws.

Applying Section 91 to the present case, we hold that dead members who are dropped from the
membership roster in the manner and for the cause provided for in the By-Laws of GCHS are not to be
counted in determining the requisite vote in corporate matters or the requisite quorum for the annual
members’ meeting. With 11 remaining members, the quorum in the present case should be 6. Therefore,
there being a quorum, the annual members’ meeting, conducted with six 47 members present, was valid.

Vacancy in the

Board of Trustees

As regards the filling of vacancies in the board of trustees, Section 29 of the Corporation Code provides:

"SECTION 29. Vacancies in the office of director or trustee. -- Any vacancy occurring in the board of
directors or trustees other than by removal by the stockholders or members or by expiration of term,
may be filled by the vote of at least a majority of the remaining directors or trustees, if still constituting
a quorum; otherwise, said vacancies must be filled by the stockholders in a regular or special meeting
called for that purpose. A director or trustee so elected to fill a vacancy shall be elected only for the
unexpired term of his predecessor in office."

Undoubtedly, trustees may fill vacancies in the board, provided that those remaining still constitute a
quorum. The phrase "may be filled" in Section 29 shows that the filling of vacancies in the board by the
remaining directors or trustees constituting a quorum is merely permissive, not
mandatory. 48 Corporations, therefore, may choose how vacancies in their respective boards may be
filled up -- either by the remaining directors constituting a quorum, or by the stockholders or members in
a regular or special meeting called for the purpose. 49

The By-Laws of GCHS prescribed the specific mode of filling up existing vacancies in its board of directors;
that is, by a majority vote of the remaining members of the board. 50

While a majority of the remaining corporate members were present, however, the "election" of the four
trustees cannot be legally upheld for the obvious reason that it was held in an annual meeting of the
members, not of the board of trustees. We are not unmindful of the fact that the members of GCHS
themselves also constitute the trustees, but we cannot ignore the GCHS bylaw provision, which
specifically prescribes that vacancies in the board must be filled up by the remaining trustees. In other
words, these remaining member-trustees must sit as a board in order to validly elect the new ones.

Indeed, there is a well-defined distinction between a corporate act to be done by the board and that by
the constituent members of the corporation. The board of trustees must act, not individually or
separately, but as a body in a lawful meeting. On the other hand, in their annual meeting, the members
may be represented by their respective proxies, as in the contested annual members’ meeting of GCHS.